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Certainty for independent contractors

The Government has signaled plans to provide clarity to the status of independent contractors and businesses that engage them. The changes are intended to help address the uncertainty associated with legal disputes involving status challenges between "contractors vs employees".

The changes are part of the ACT-National coalition Government's efforts to refine workplace relations, particularly in the gig economy and contracting space.

The key feature is a new "gateway test" which includes four specific criteria that must be met for a worker to be classified as a "contractor":

  1. A written agreement specifying the worker is an independent contractor.
  2. The worker is not restricted from working for other businesses, including competitors.
  3. The worker is not required to be available at specific times or for a minimum number of hours, or they can subcontract their work.
  4. The worker cannot have their contract terminated for refusing additional tasks or engagements.

If these criteria are met, the worker is considered a contractor. If not, the existing legal test will apply to determine their employment status, so it will be imperative for businesses to ensure their contractor engagements meet the "gateway test’" - it is likely the criteria will be ironed out further once the proposal goes through the parliamentary law-making process.

This change is intended to reduce the complexity and costs businesses face when dealing with employment status challenges, provide more security for innovative business models, and improve terms and conditions for contractors. It aims to support the flexibility of contracting while also addressing concerns over employment classification, ultimately benefiting both businesses and workers in sectors like the gig economy.

The government hopes to introduce these amendments to the Employment Relations Act in 2025.